Energy

December 30, 2001|Antonio Fins

The roller coaster ride in the energy sector is likely to pick up speed this year.

Oil prices crashed at the end of 2001, and most analysts don't expect an appreciable increase in petroleum prices at least until the U.S. economy picks up steam. And that's not likely to happen until the second half of 2002.

On top of that, a warmer-than-usual start to the winter also deflated prices of natural gas. So, all told, the energy sector, a prime suspect behind inflation fears going into 2001, is actually going to help the economy rebound.

In the Sunshine State, the largest power company has a new chairman, Lew Hay, and a few old problems.

The Juno Beach electric conglomerate needs to draw more profits from its out-of-state markets. Perhaps Florida Power & Light will even find a new merger partner to replace the scuttled deal with Entergy Corp. More importantly, FPL's Florida utility is facing the first extensive rate review in two decades.

A bigger issue is whether the collapse of giant Enron Corp. is an isolated case or whether other large energy-trading companies may also follow. Two Enron peers, El Paso Corp. and Calpine Corp., have taken steps to clean up balance sheets to prove they don't have an Enron problem. Nevertheless, shares in those companies, and power utilities such as FPL, took a plunge.

Ironically, Enron was one of the biggest advocates for energy deregulation across the country. Now that the company is in Chapter 11 bankruptcy, some of the impetus behind deregulating electric markets has faded, too.

And Enron might have to unload its planned natural gas pipeline from the Bahamas to Fort Lauderdale.